When it comes to navigating today’s cannabis insurance market, two people who see the challenges up close are Jim McErlean, Director of Business Development at Cannasure, and Lee Woodruff, Jencap’s National Practice Leader for Cannabis. Between them, they spend their days balancing what reinsurers will allow, what carriers are willing to cover, and what insurance coverage cannabis businesses need to survive and grow.
Their perspective? The industry is maturing, but not without friction. Consolidation is changing who has power at the table, margins are thinner than ever, and reinsurers are holding the line on how much capacity they’ll support. For operators, that means insurance isn’t just another expense—it’s a strategy that can make or break long-term stability.
Fewer Players, Bigger Impact
In 2024, overall cannabis deal activity fell sharply, but the deals that did close were larger and more strategic. Buyers now want a clear picture of legacy liabilities, everything from product testing practices to prior claims, before signing off.
Woodruff sees this firsthand, noting, “Any time consolidation is in play, buyers are asking tougher questions about insurance. They want confidence that the business they’re acquiring won’t saddle them with hidden risks. That makes coverage structure and risk management part of the valuation conversation.” For brokers, that means being at the table earlier in the M&A process, not just at renewal.
Pressure from Price and Policy
Wholesale prices continue to swing, making profitability a moving target. The U.S. Spot Index for wholesale cannabis hovered around $1,098 per pound in August 2025, which is better than the lows earlier in the year, but still far from the margins that once defined the market. While federal rescheduling could ease some tax burdens, it won’t instantly stabilize margins or open the floodgates to banking.
Meanwhile, new product categories, like hemp-derived THC beverages, are complicating the picture. Woodruff points out the uncertainty in that space, saying, “More carriers are getting comfortable with hemp-derived intoxicating beverages, but the long-term regulatory environment is a wildcard. The Farm Bill wasn’t written with these products in mind, and that creates a challenge when you’re trying to predict future risk.”
This tug-of-war between opportunity and oversight means insurance placement is still tricky. While reclassification to Schedule III could ease the 280E tax burden, it won’t immediately fix access to capital or stabilize pricing, leaving operators in a waiting game. Those that stay nimble on compliance and transparent in their documentation will have an easier time maintaining access to coverage.
Reinsurers Hold the Keys
Behind the scenes, reinsurers remain the ultimate gatekeepers. They set the tone for how much capacity carriers can put into the cannabis market and at what price. McErlean describes it as both enabling and restricting. “Reinsurers are fantastic in the sense that they let us operate at scale. But they’re also limiting,” he says. “They’ve drawn hard lines on liability and property limits, and they’re pushing back on pricing, even when loss experience is clean, because of the unknowns around long-term product liability.”
That tension means cannabis operators with strong controls, like robust testing, defensible property protections, and documented recall protocols, are the ones most likely to secure competitive terms.
The Path Forward
So, what’s a cannabis business operator to do? Luckily, they have you as their agent, and you have us in your back pocket.
At Jencap, we see the shifts of the industry every day. Our specialized team works with reinsurers, carriers, and operators across the country, giving us a front-row view of where the market is cracking down, and where it’s still willing to stretch.
The industry is entering a more disciplined era where cannabis insurance expertise is the advantage that determines who can keep scaling when others stall. Let us be your partner in helping guide your cannabis clients. Reach out today to schedule a consultation.
